How to secure your family’s financial future

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29 November 2018 • 3:23pm

Intergenerational planning

If you’re a baby boomer, you may recognise the power of financial planning. As life expectancy increases and ‘pension freedoms’ offer greater flexibility, it’s a good idea to seek professional advice on getting the most out of the wealth you’ve worked hard for your whole life.

“Increasingly, people are recognising how the financial and economic conditions in the 10 years since the financial crisis have impacted generations differently,” says Colin Nelson, head of propositions and partnerships at St. James’s Place Wealth Management.

“While families still find it hard to openly discuss their finances as a group, we are seeing a growing recognition that a ‘family wealth planning meeting’ can be beneficial. It leads to a better understanding of the issues being experienced. On the face of it, the solutions may seem simplistic – ‘pass wealth from one generation to another’ – but in reality, passing down wealth in an efficient way requires expert advice. That’s why many families are choosing to engage with a financial adviser as a group rather than individually.”

Intergenerational wealth transfer is on the rise

The need for intergenerational financial planning has never been greater. Baby boomers (those in their 50s and 60s) and the ‘silent generation’ (those aged 70 and over) are particularly important, as they hold the majority of the UK’s wealth. A report by the Centre for Economics and Business Research (CEBR), Passing on the Pounds, shows these generations command almost 70 per cent of all household wealth in the UK: therefore, the management of their money is critical to the health of the economy as a whole.

Wealth is concentrating in older generations

As this generational concentration of wealth increases, the number of adults inheriting larger amounts of money will also potentially rise. Generation-to-generation transfer of wealth is set to rise from £69 billion (as in 2017) to £115 billion by 2027, with the average inheritance jumping from £62,000 to £91,000, according to the CEBR’s ‘Passing on the Pounds’ report from May 2017. Almost £1 trillion is expected to pass between generations over the course of a decade; by 2047, we could see as much as £335 billion a year passed on.

Proactively preserve wealth

The nation’s wealth will primarily move from the silent generation to the baby boomers, then to generation X (mid-to-late 30s–40s) and on to the millenials (early 20s–mid-30s); or, in more human terms, from grandparents to parents to children to grandchildren.

The new generation – generation alpha – is an important one to watch. Aged 12 and under, these are the children of both generation X and the millennials.

Most wealth is from property

Passing wealth down through the generations is a sensible move, but can be fraught with difficulty – not least because much of the nation’s wealth is tied up in property. Over-50s own 75 per cent of Britain’s housing wealth, while under-35s account for less than 6 per cent, according to estate agent Savills, pointing to a huge divide.

“Most of our clients want to share their wealth during their lifetime in order to help their children, grandchildren and great-grandchildren. There are myriad ways you can proactively preserve your wealth and pass it on to the next generation – it’s just a question of finding the best approach for you and your family.”

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

St. James’s Place representatives represent only St. James’s Place. The Telegraph Investment, Retirement & Tax Planning Advice Service is provided by St. James’s Place Wealth Management plc, registered in England, registered no. 4113955, registered office St. James’s Place House, 1 Tetbury Road, Cirencester, Gloucestershire, GL7 1FP. Telegraph media Group is an Introducer Appointed Representative of St. James’s Place Wealth Management plc, which is authorised and regulated by the Financial Conduct Authority. Telegraph Media Group Limited, 111 Buckingham Palace Road, London, SW1W 0DT, company registration number 451593.

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The value of an investment with St. James’s Place will be directly linked
to the performance of the funds selected and may fall as well as rise. You
may get back less than the amount invested. Equities do not provide the
security of capital associated with a deposit account with a bank or
building society. The levels and bases of taxation and reliefs from taxation
can change at any time and are dependent on individual circumstances.

Telegraph Media Group Limited is an appointed introducer to St. James's Place
Wealth Management plc which is authorised and regulated by the Financial
Conduct Authority.